Issue before Court:
Whether ITAT was right in dismissing appeal of revenue on ground of delay in issuance of notice u/s 158BD.
Brief facts:
- On 03.08.2000 a search was conducted under Section 132 of the Act at the business premises of M/s Friends Portfolio Pvt. Ltd. and at the residential premises of its Director, Shri Manoj Aggarwal.
- During the search and the course of investigation and assessment proceedings DCIT found that that Sh. Manoj Aggarwal provided bogus accommodation entries to various individuals. The beneficiaries included the present respondent-assessees who received accommodation entries in lieu of cash.
- The assessment u/s 158BC of M/s Friends Portfolio Ltd. was completed on 29.08.2002. The AO, after considering the materials, recorded to his satisfaction and issued a letter to the respective AO’s of the respective assessees. Thereafter, the case of the assessees was taken up for scrutiny as per the provisions of section 158BD and statutory notices u/s 143(2) and 142(1) were issued and served upon them. Notice u/s 158BD was issued on 10.07.2003 & 18.07.2003 respectively. Assessments were framed by making various additions.
- CIT (A) in case of sudhir Dhingra deleted additions on account of absence of proper evidence and dismissed appeal in case of Renu Verma. In case of Renu Verma ground of not proper recordation of satisfaction was agitated before CIT (A) but the same was disallowed by CIT (A).
- Before ITAT cross appeal was filed by Sudhir Dhingra and appeal filed by Renu Verma by taking ground that assessment u/s 158BC liable to quash on ground of delay in issuance of notice u/s 158BD.
- ITAT allowed appeals on this ground and quashed the assessment.
Contention of the revenue:
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